David Laws battles for classical liberalism in the Lib Dems

By Harry Phibbs
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Eight years ago a group of Lib Dems contributed essays to a volume called the Orange Book which sought to shift thinking in the Party away from socialism and towards liberalism. While social liberalism in the Party was well represented, the case for economic liberalism was not. Nor had it been for many years even before the merger with the SDP. Jo Grimond believed in economic liberalism but he ceased to be Liberal Party leader in 1967.

The Institute of Economic Affairs have now published a new collection of essays Eight Years since the Orange Book: Have the Liberal Democrats ‘reclaimed’ liberalism?

It seeks not just to mark the progress of this small group of liberals within the Lib Dems, but also to consider what future direction the Party should take.

The Lib Dem MP and former cabinet minister, David Laws, co-edited and contributed to the original book and has also written a contribution to the sequel.

He says:

“The Orange Book was not written in order to make a Lib Dem-Conservative coalition possible, but without the policy changes which the book and its authors anticipated, it is much more difficult to imagine the present coalition being formed and sustained.

“Future UK governments should consider a further substantial real rise in the personal allowance, along with lower marginal rates of tax at all income levels….even after the existing fiscal consolidation, state spending will account for some 40% of GDP, a figure that would have shocked not only Adam Smith, Gladstone and J.S. Mill, but also Keynes and Lloyd George…The liberal ambition should be for long-term total public spending to be restrained at below the trend rate of growth of the economy…”

Reflecting on the motivation for the Orange Book, Mr Laws recalls that he and his co-editor Paul Marshall were "deeply frustrated by the Party’s entrenched conservatism towards the reform of public services." Mr Laws adds that:

Party spokesmen on health and even education too often sounded like the paid advocates of the public sector unions, and the word ‘choice’ seemed to be regarded as a dirty, right-wing word.

Topically, he writes about the need for "reforming and simplifying the tax system to reduce avoidance opportunities and to scale back allowances and reliefs which often give excess benefits to those on higher income levels."

On non-economic matters he says:

Meanwhile political reform is now designed to devolve power (UK localism and EU reform) and to control excessive power (fixed-term parliaments, Lords reform, party funding reform). Much of this traditional liberal agenda of political reform ought to have been completed by the end of the current Parliament.

On the agenda of personal liberty, there is no cause for complacency. The ‘meddling state’ has been on the forward march in Britain, and there is still much to do to free citizens from well-intentioned but often unnecessary or counter-productive interferences in individual liberty. The present government is seeking to pursue this de-regulation agenda, and it should do so while ensuring that individuals are still protected from arbitrary abuses of power.

Of course, often it is not possible to put state interference in economic and  non economic matters into neat boxes. (In the original Orange Book, Mr Laws lamented "nanny state liberalism" noting that a Lib Dem conference had voted in favour of banning the giving of gold fish as prizes at fairs.

Paul Marshall also writes for the new IEA paper and calls for the free schools policy to be boosted by allowing companies to make a profit by opening them. He argues that this is especially important in making sure the new schools are established in disadvantaged areas - not just where there are plucky clusters of middle class parents.

He says:

There can be no doubt that within the right framework of controls and accountability, for-profit schools are very much consistent with the Orange Book approach of using economically liberal means to deliver social liberal ends.

I reviewed the original Orange Book for the Social Affairs Unit noting the critique offered by Mr Laws of the NHS and adding:

It sounds like something from the Institute of Economic Affairs, doesn't it?

And it came to pass.

Lots of smelling salts needed for Simon Hughes, Lord Oakeshott and the rest on the Left of the Lib Dems. But why should it be regarded as "moderate" for the state to spend 49% of our money just because that happens to be the status quo? Why should splitting the difference between what the Conservatives and Labour advocate be a noble position for the Lib Dems, always just aiming to be the centrist party? Why should the Lib Dems so often be the real conservatives in the coalition - acting as the heirs to Gordon Brown as the roadblock to public service reform?

My only worry is that in picking a fight in this way Mr Laws may have delayed rather than advanced his return to Government - which Paul would like to see and so would I.